So am i right that Baro is also in use when flying tilted? Or just Cruise Control?
Yes, Baro is always in use when INS13 is selected for position estimation in our three dimensional space. If Cruise Control (CC) applies additionally in Velocity Roam (VR) like Cliff wrote, then it's only used to compensate for less thrust when banking, but it "knows" nothing about altitude. I imagine PID controller must be tuned between two extrema a) overshooting or b) under-compensating. If it's overshooting it will oscillate, and when it's under-compensating it will take at worst forever to reach desired position. I would try to play with altitude PIDs such that copter comes back to desired altitude fast, but it's not oscillating. I think PID control is pretty well explained here
Save your current PIDs somewhere and experiment, watch out for your fingers (don't hurt yourself)...
That would be my gut's feeling what
might be wrong form what you describe.
P.S Complementary is not using baro for position estimation, so INS13 might be better in maintaining altitude as there baro is fused with other sensors.